In Mexico, payroll is complex and there are different employee salary schemes. Of course, the law applies differently to each of these.
For example:
Employers that pay wages on a weekly, biweekly or biweekly basis apply the rate and table corresponding to those payment periods to determine the income tax to be withheld or the employment subsidy to be paid.
In accordance with the Income Tax Law, when salary payments are for periods of less than one month, the subsidy that corresponds to the employee for all payments received in the month cannot exceed the amount that corresponds according to the monthly table for the total amount received in the month in question.
Therefore, it is necessary to make a monthly adjustment to salaries paid on a less than monthly basis.
In this way:
Income tax to be withheld (employment subsidy payable) weekly
| Week | ||||
| Concept | First | Second | Third | |
| Salary | $800.00 | $800.00 | $800.00 | |
| Less: | Lower limit | 148.41 | 148.41 | 148.41 |
| Same: | Exceeding the lower limit | $651.59 | $651.59 | $651.59 |
| By: | Percent to be applied to the surplus | 6.40% | 6.40% | 6.40% |
| Same: | Marginal tax | $41.70 | $41.70 | $41.70 |
| More: | Fixed fee | 2.87 | 2.87 | 2.87 |
| Same: | ISR | $44.57 | $44.57 | $44.57 |
| Less: | Employment subsidy | 90.44 | 90.44 | 90.44 |
| Same: | Income tax to be withheld (employment subsidy payable) weekly | ($ 45.87) | ($ 45.87) | ($ 45.87) |
Thus, in the last week of the month, all salaries paid in the first weeks, the corresponding salary in the last week and the other income paid in the last week must be considered in order to apply the monthly rate and table.
Taxable income for the month
| Formula | Replacement | |
| First week's salary | $800.00 | |
| More: | Second week's salary | 800.00 |
| More: | Third week's salary | 800.00 |
| More: | Fourth week salary | 800.00 |
| More: | Commissions and prizes paid in week four | 4,700.00 |
| Same: | Taxable income for the month | $7,900.00 |
ISR of income for the month
| Formula | Replacement | |
| Taxable income for the month | $7,900.00 | |
| Less: | Lower limit | 5,470.93 |
| Same: | Exceeding the lower limit | $2,429.07 |
| By: | Percent to be applied to the surplus | 10.88% |
| Same: | Marginal tax | 264.28 |
| More: | Fixed fee | 321.26 |
| Same: | ISR of income for the month | $585.54 |
The ISR payable for the month must be reduced by the withholdings made in the first weeks and the employment subsidy actually paid in the same period must be added to it, since according to the monthly table there is no entitlement to it.
ISR to be withheld in the fourth week
| Formula | Replacement | |
| ISR of income for the month | $585.54 | |
| Less: | Monthly employment subsidy | 0.00 |
| Same: | ISR payable on income for the month | $585.54 |
| Less: | Withholdings made during the month | 0.00 |
| More: | Employment subsidy paid for the month | 137.61 |
| Same: | ISR to be withheld in the fourth week | $723.15 |
Finally, it should be noted that the amounts actually paid to the employee during the first three weeks cannot be credited by the employer against its income tax liability or that withheld from third parties, since the creditable employment subsidy is the amount actually paid in accordance with the table for its monthly calculation, not weekly.
Complete ISR 2023 Tables [Downloadable and editable].
The 2023 ISR rates have several changes with respect to last year, as cumulative inflation since the last change has already exceeded 10%.
Next you will be able to download an XML file with all the tables in an editable form so that you can customize it as you prefer.
So now you know, if you are looking for an ally to simplify your payroll processes, Zentric is the best option.
Finally, we invite you to subscribe to our blog to stay up to date with the payroll.
Source: IDC Online
